The Dark Side of Monaco, Uncovered: Murder, Tabloid-Ready Royal Marriage, Art-World Sting Among Newest Scandals

Monaco’s Port de Fontvieille quarter houses the Princess Grace Rose Garden, created by Prince Rainier as a memorial to her in 1984, two years after her death at age 52.

Cannes' glitzier neighbor, the tax-haven principality up the coast, is less than 1 square mile but generates more glamor and mayhem, as a reporter from the south of France looks into the stories behind the latest headlines.

This story first appeared in the May 15 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

When 12 police officers showed up at the sumptuous $300 million Belle Epoque penthouse owned by Dmitry Rybolovlev in late February, it wasn’t to arrest the Russian billionaire.

Instead, Monaco detectives were there to help him take down a powerful Swiss art dealer whom Rybolovlev, 48 — a onetime fertilizer magnate who now owns the Greek island of Skorpios, an $88 million apartment in Manhattan and the Monaco football team — said had ripped him off.

Meanwhile, just a few days earlier, a 28-year-old from Bristol, England, had disappeared in full view of some of the principality’s 520 cameras after a drunken fight in a nightclub on the port. The body of Michael Graydon was recovered 13 days after he vanished, half-hidden behind the church near where he was last seen. His friends and family accused police of not working hard enough to find him because he lacked the wealth or power that makes things happen in Monaco. In fact, by the time Graydon’s body was found, his story had been fully eclipsed by a scandal involving hundreds of millions of dollars in art owned by one of Monaco’s wealthiest residents.

Prince Albert II and Charlene Wittstock were married in 2011.

In a sting operation worthy of a John Le Carre novel, police took an art dealer named Yves Bouvier into custody when he arrived Feb. 25 at Rybolovlev’s 17,500-square-foot abode. Bouvier had flown in from Geneva, thinking he was about to negotiate the final payment for a $186 million Mark Rothko painting already delivered to the Russian.

Rybolovlev, however, maintains that Bouvier secretly overcharged him over the past 10 years for as many as 40 masterpieces by Picasso, Gauguin and Modigliani that he bought — information Rybolovlev says he discovered by chance in late December.

"If he had a problem, why not tell me?" Bouvier, who denies the charges, told a Swiss newspaper. "Instead it was like he was trying to put me into the gulag and intimidate me." Bouvier, 51, who was charged with fraud and money laundering, did not have a formal contract with Rybolovlev. His arrest — and subsequent release on $11 million bail — rocked the art world.

But the incident may come back to haunt Rybolovlev as well as Monaco prosecutors and HSBC Private Bank officials. Monaco resident Tania Rappo, who served as an intermediary between Rybolovlev and Bouvier in the deals, was named as an accomplice to the money laundering in the criminal complaint.

Rappo’s Monaco lawyer, Frank Michel, tells The Hollywood Reporter that Rappo has filed a countersuit in Monaco alleging that local HSBC officials falsified documents implicating her because it was the only way charges could be filed against Bouvier in Monaco. Calls to Rybolovlev's lawyer were not immediately returned.

Rybolovlev is one of HSBC’s biggest clients in Monaco. Monaco prosecutor Jean-Pierre Dreno confirms the two complaints to THR but says he has no further comment, citing “unfortunate leaks” from lawyers for both sides.

"L’affaire Bouvier" is the kind of complicated, multimillion-dollar spat that’s common among Russian oligarchs. It’s also typical of the Bond-esque scandals that have been a hallmark of this sex-, sun- and money-drenched tax haven tucked between Italy and France — less than 1 square mile that claims some 36,000 residents — ever since a Genovese pirate named Francesco Grimaldi disguised himself as a monk and seized the Rock of Monaco in 1297.

Bouvier was arrested in the penthouse where Lebanese banker Edmond Safra died in a 1999 fire.

There are curious ties between this case, the bizarre death of another Monaco billionaire in 1999 and HSBC’s notorious private bank in Geneva, which once helped finance al-Qaida as well as drugs and arms traffickers even as it numbered such luminaries as Elle Macpherson, Diane von Furstenberg and Formula One businessman Flavio Briatore among its customers.

In a twist that could happen only in Monte Carlo, Bouvier’s arrest took place in the same penthouse where Edmond Safra, the billionaire banker and then owner of the property, died in a mysterious fire in 1999.

After a controversial trial in 2002, Safra’s American nurse, Ted Maher, was convicted of causing the fire that killed Safra in what prosecutors said was an attempt by Maher to rescue Safra and be seen as a hero. But rumors still persist that his death was a Russian hit because Safra was cooperating with the FBI about laundering money for Russians through his bank — and Maher was just the patsy.

Bouvier is head of Natural Le Coultre, an art storage, shipping and servicing company.

"It’s Monaco. What do you expect?" says Michael Griffith, an American lawyer based in Southampton, N.Y., who represented Maher at his trial. "There’s a new scandal every month. What’s strange is, the Russian case is happening right where it all went down with Safra."

Safra, a Lebanese banker, headed up the Republic National Bank of New York, which was sold to HSBC in a $10.3 billion deal finalized a few days after his death. The deal doubled HSBC’s private banking operation and resulted in the establishment of HSBC’s private bank in Geneva — which allowed wealthy individuals all over the world to evade taxes, according to an exposé of the bank published by the International Consortium of Investigative Journalists in February.

Safra’s bank, now HSBC Private Bank (Monaco), is located on the first four floors of the Belle Epoque building at 17 Avenue d’Ostende, underneath the penthouse Safra once occupied and where Rybolovlev now lives.

A man named Gerard Cohen, who’s so well known at the upper levels of Monaco society that he’s called "Monaco Gerard," was the CEO of the Republic National Bank under Safra and kept that title when it became HSBC Private Bank (Monaco). Not surprising to longtime watchers of Monaco, Cohen also has surfaced in the Bouvier case.

Ten days before Bouvier was arrested, Cohen was spotted having dinner at a hotel in Gstaad, Switzerland, with Rybolovlev and Monaco’s Minister of Justice, Philippe Narmino, according to Swiss newspaper Le Temps. Cohen did not return phone calls from THR, nor did Rybolovlev’s Geneva-based attorney.

The May 2014 murder of Monaco billionaire Helene Pastor looked like a Mafia hit, but her daughter Sylvia’s husband, Wojciech Janowski (pictured), was accused of ordering the killing.

But to veteran observers of Monaco, the Bouvier affair — especially the dinner in Gstaad — exposes how entrenched Russian money and influence appear to have become here, decades after Princess Grace married Prince Rainier in 1956 and brought what now seems like an almost quaint glamour to the principality.

Monaco — especially in May, when the high rollers at the famed Casino get edged out by the Grand Prix and by Hollywood A-listers making the 35-mile side trip from the Cannes Film Festival — looks as alluring as it did when Grace Kelly and Cary Grant filmed part of To Catch a Thief in the principality in 1955. And the House of Grimaldi still is one of the wealthiest families in the world. Prince Albert (the 57-year-old son of Kelly and Rainier) has an estimated net worth of $1 billion; Monaco scandals today are more likely to be covered in the Financial Times than in People, for which the Grimaldis were cover staples in the 1980s.

Much has remained the same in Monaco. "The Italian Mafia is still here," says a detective based in nearby Nice, pointing out that Italian mobsters were first fingered as the hit men in the shocking murder of Monaco heiress Helene Pastor and her chauffeur in Nice last May before it turned out that it was allegedly a plot cooked up by her son-in-law. "But the Russians are growing in influence. Everyone wants to make them happy."

Many buyers of the luxe apartments in Monaco’s new residential skyscraper Tour Odeon, which includes the $280 million, five-bedroom "Sky penthouse" with a water slide leading from a balcony to an infinity pool, are expected to be Russian or from Kazakhstan or Azerbaijan. Russians see Monaco "as the most strategic place to hide money," says Robert Eringer, who headed up Monaco’s intelligence division from 2002 to 2007. "Even if they’re in favor with Putin now, they know they might not be tomorrow and they better have their money in a safe place outside Moscow."

The Grimaldis’ so-called Pink Palace was the site of Prince Albert’s wedding to Charlene Wittstock.

Indeed, Prince Albert even officially declared 2015 "The Year of Russia" in Monaco, ostensibly to promote Russian art and culture in the principality. "That’s so Monaco," says the wife of a local artist. "It’s a place of red herrings. What they want you to focus on — the prince, the Grand Prix, the Red Cross ball, the Year of Russia — just serves to hide what’s really going on. It’s always been like that. Thank God Charlene finally had the twins."

Charlene Wittstock, the former Olympic swimmer from South Africa who married Prince Albert in 2011, gave birth in January to twins Jacques and Gabriella. Their arrival seemed to cement a precarious union gossiped about unmercifully since Wittstock, now 37, first met Albert, the father of two illegitimate children by two mothers, in 2000 after a swimming event in Monaco.

"Princess Charlene has blossomed since the babies were born," says a 48-year-old American businesswoman who has lived in the principality for 26 years and briefly dated Prince Albert two decades ago. "Everybody talks here and everyone gave Charlene a hard time, including me. But we’ve kind of had to change our tune."

Prince Rainier and Princess Grace in 1966 with their children, (from left) Albert, Caroline and Stephanie.

The controversy that preceded the wedding — a respected French news outlet reported that Charlene had tried to flee Runaway Bride-style before being intercepted at Nice International, and a reliable source confirms the episode to THR — was reminiscent of the Grimaldi family scandals surrounding then-playgirl princesses Caroline and Stephanie.

The sisters were the Kim and Khloe Kardashian of what used to be called the "jet set" in the early ’80s. Caroline married French playboy Philippe Junot when she was only 19, and Stephanie had several high-profile boyfriends, from the sons of French stars Jean-Paul Belmondo and Alain Delon to Rob Lowe. But unlike the Kardashians, the Grimaldi girls seemed to be dogged by tragedy.

Princess Caroline, now 58, got an annulment from Junot after less than two years. Her second husband, Italian businessman Stefano Casiraghi, with whom she had three children, was killed in a boat race off Monaco in 1990. She separated from her third husband, Prince Ernst of Hanover, a few years ago and lives in Monaco with their daughter.

Princesses Caroline (left) and Stephanie on a balcony at the Monaco palace for a national day ceremony in 2013.

Stephanie was humiliated in 1995 when her first husband, Daniel Ducruet, was caught on film with a woman who once held the title "Miss Bare Breasts of Belgium." She divorced Ducruet, with whom she had two children, and later moved in with a married circus trainer whom she left to marry a trapeze artist. The father of her youngest child, Camille, has never been publicly identified. Now 50, she also lives in Monaco.

Author Joel Stratte-McClure, who covered Monaco for People and knew Prince Albert, scoffs at the centuries-old story that a curse was placed on the Grimaldis, barring them from ever having happy marriages. "Prince Albert told me he didn’t believe in the curse and that what’s happened in his family isn’t much different than the troubles faced by any other family," says Stratte-McClure.

Charlotte Casiraghi, Caroline’s daughter with Stefano Casiraghi (who was killed in a boat race in 1990), attended the 2013 Rose Ball in Monte Carlo with her partner, Gad Elmaleh.

The next-generation Grimaldis maintain the family glamour but with a lower profile. Caroline’s daughter Charlotte Casiraghi, 28, who has a son with Moroccan-French comic Gad Elmaleh, has modeled for Gucci. Her brother Andrea, 30, is married to a Colombian heiress worth more than $2 billion; they have two children. Pierre Casiraghi, 27, is marrying a woman from the Italian aristocracy this summer at Lake Maggiore.

But no one expects things to run smoothly — for the Grimaldis or anyone else — for long in Monaco. Mark Dezzani, who has worked as a radio announcer and DJ in Monte Carlo for years, says Monaco thrives on its slight sense of danger. "It’s almost too beautiful here," says Dezzani, who broadcasts from a harborside quai where cream-colored yachts bob in the shadow of the Alpine foothills. "If Monaco didn’t have a dark side, it might be boring. But there’s no chance of that. Monaco’s had a dark side for centuries, and I don’t think this place could run without it."